By Charlie Coffey, Senior Claims Counsel
As lawyers, we know that very few cases go to trial. If a case does not get dismissed by the court on motion, it most likely will settle.
What if you and your client strongly disagree about whether to settle a case?
Decide if you can or should continue the representation. In the case of a mere disagreement, even one where the client has sought out the advice of another attorney (but you have not been discharged), you likely need not withdraw. In fact, a second attorney may help minimize or clear up misunderstandings between you and your client. However, if a client has threatened a malpractice suit and/or consulted with a malpractice attorney, you may be forced to withdraw. Under Model Rule of Professional Conduct 1.7, a lawyer cannot represent a client if there is a concurrent conflict of interest such as the existence of a significant risk that the representation will be limited by the personal interest of the lawyer (in this case, that personal interest would be avoiding a malpractice action). A representation could only continue in such a case if “…the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation…” and the client “…gives informed consent, confirmed in writing.” Please note that the foregoing discussion is based on the Model Rules of Professional Conduct, and thus the ethics rules may be different in your state. It is always recommended to seek the advice of an ethics official in your area should you be faced with this dilemma.
Settlement, unfortunately, does not always mean that a matter has ended for a lawyer.
When clients are unhappy with a settlement, they often blame their attorneys, alleging that their counsel concealed pertinent facts from them, failed to properly explain something, made an error in the case that forced them to settle, or asserted undue influence that amounted to coercion. At The Bar Plan, we have seen several cases where our insured thought that a settlement was the end of a matter, but it really was just the beginning of a malpractice claim.
All states allow clients or former clients to sue their lawyers (with these lawsuits colloquially being called “Settle and Sue” cases) in one form or another.
Missouri has espoused the majority view on this issue, saying, “Although a settlement of an underlying lawsuit injects some speculation into a claim for attorney malpractice, it does not preclude a plaintiff from proving malpractice so long as the plaintiff can establish a causal link between the alleged negligence and any loss incurred”. The plaintiff must “‘prove that the settlement was necessary to mitigate ... damages,’ id., or ‘that plaintiff was driven to the necessity of settling because, if the case had not been settled, plaintiff would have been worse off’.” Some states hold “Settle and Sue” plaintiffs to an even higher standard. For example, some California courts have required “proof to a legal certainty” that, if the case had not settled, there would have been a better outcome. While there have been various decisions that held that a post-settlement legal malpractice action will only lie in cases of fraud , the likelihood of success with this argument is slim based on a survey of the law by this author.
Minimize the risk of your client experiencing “settler’s remorse.”
Jay Reeves, Risk Manager at Lawyers Mutual Insurance Company in North Carolina, has prepared a list of “Tips for ‘Settle and Sue’ Protection:”
• Make sure you clients stay well informed at all stages of litigation, go over the terms of any settlement, and make sure they completely understand to what they are agreeing. Communication is key!
• In some cases, consider sending your client a letter that clearly spells out the details of the settlement. In the absence of this, you at least want to prepare a memo to your file.
• Explain the alternatives to settlement by laying out the pros and cons of each option.
• Give your client time to consider their options. Avoid last-minute settlements whenever possible.
• Ensure that you act diligently and expeditiously in every case, even the simple ones or those that you know will settle.
Prevention of a Malpractice Claim
A well-prepared case and an informed client goes a long way in the prevention of a legal malpractice claim. Lawyers take on legal malpractice risks every time they accept or decline a representation or take action on behalf of a client in a case. If you have questions about your risks as a lawyer, The Bar Plan’s Risk Managers are available for both insureds and non-insureds at 1-800-843-2277 x103.
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[1] Civil Justice Initiative: The Landscape of Civil Litigation in State Courts, National Center for State Courts (2015), available at https://www.ncsc.org/~/media/Files/PDF/Research/CivilJusticeReport-2015.ashx
[2] Model Rules of Prof'l Conduct R. 1.7 (2016).
[3] Louie Castoria, Settle and Sue: Settlements as Preludes to Malpractice ClaimsKaufman Dolowich Voluck LLP (2017), https://www.kdvlaw.com/news-resources/settle-sue-settlements-preludes-malpractice-claims/ (last visited Sep 20, 2018).
[4] Williams v. Preman, 911 S.W.2d 288, 298 (Mo.App.1995).
[5] Collins v. Missouri Bar Plan, 157 S.W.3d 726, 735–36 (Mo.App. W.D. 2005)
[6] Castoria, supra.
[7] Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346 (Pa. 1991)
[8] Id.
